Mobile Banking Has Passed the Inflection Point

Sometimes one can almost predict an explosion of buzz about certain topics. Over the last couple of years, awareness of the building momentum in mobile banking, mobile payments and mobile commerce has been building steadily. One of the indicators is increasing use of the mobile banking channel by financial institutions.

So we now can predict the next stage. There will lots of hype about mobile banking, and then people will hit a point where the inevitable "has it failed" stories begin to be written, with the angle that the impact has not been great.

That already has happened with "near field communications" as a communication channel for mobile payments, which is conceptually distinct from mobile banking. The current tenor of stories about NFC generally concerns "how slow and how hard" adoption has become. That always was going to happen, as huge new infrastructures have to be built before NFC as a communications channel can drive significant transaction volume.

Mobile banking, and then mobile commerce, will have their own hype waves, the intermediate term disillusionment, and finally mass adoption. But it will take time.

There is a significant difference between developed and developing regions, though.

In developed markets mobile banking primarily is a customer service and convenience tool, with scant opportunity for incremental revenues. But mobile banking is important because consumers increasingly want it, and lack of such features could drive customers to other competitors if it is lacking.

For the most part, mobile banking in developed markets is designed around information access, such as the ability to check accounts, as well as simple transactions, such as the ability to move money between accounts or deposit a check or make a payment.

In developing markets the upside is greater. In regions where the banking infrastructure is undeveloped, the mobile device itself becomes a combination automated teller machine and banking location, allowing users to send and receive money. Typically, at the moment, this involves the use of basic test messaging and third-party retail locations where money is physically deposited and withdrawn, with the information about a payment being sent by text message.